Inside the AMC Saga: 9fin's definitive account of AMC’s survival

9fin is giving Wall Street Skinny readers early access to its in-depth, multi-part investigation into how AMC pulled off one of the most audacious liability management exercises in modern capital markets.

Across four chapters, our investigation reveals the backroom negotiations, legal maneuvers, and extreme resourcefulness that saved AMC from bankruptcy.

From the creative strategies of Doug Ormond, to the extreme resourcefulness of Adam Aron and Sean Goodman and the perfectly timed meme-stock chaos unleashed by Keith Gill, this story has it all.

This is the kind of depth and sophistication (and entertainment) that you can only find on 9fin. Nowhere else gives you this level of access to the individuals, institutions, and new developments that are reshaping the distressed debt markets.

Read the full story

This story just scratches the surface — on 9fin you get real-time data, expert analysis, and deep reporting across credit and restructuring. Plus, we’re offering The Wall Street Skinny subscribers a 30 day free trial!

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Special Report: Is Private Credit Past its Peak?

Much ado is being made in the headlines about Private Credit these days. Are we at — or past — peak for an asset class that has become the darling of investors over the past few years? Or do greater things lie ahead?

Perhaps it makes sense first to define “peak”.

Are we at peak market size in terms of how much is invested in the asset class?  Absolutely not.

Have we passed peak private credit quality and opportunity set? Quite possibly.

Let’s dive into both aspects, speaking first with respect to market and investment size.

The emergence of private credit at scale is the logical outcome of the regulations that were put in place post-GFC designed to derisk the banking sector and decentralize lending risk. If we were sitting here 17 years after the collapse of Lehman Brothers with all lending concentrated in an oligopoly of six American banks, everyone would be pounding the table saying “we need to decentralize!”.

The success of private credit is a healthy offshoot of the past decade and a half of monetary policy.

But until now, access to private credit investments has effectively been limited to institutional investors. When you combine the opening up of global wealth channels at private capital firms, the loosening of regulations that may soon allow retail 401(k) investors to participate, and the end of Quantitative Tightening, it seems to me that there’s another wall of money coming for private assets. It seems absurd to think we are past peak size.

When it comes to peak opportunity, I would argue that’s more of a mixed bag.

Many would argue that private credit is untested and has yet to go through a full market cycle. I’m not so sure, given how well the asset class weathered three years of tightening monetary policy and then downturn in 2022/23 during the regional banking crisis. Yes, there have been some recent blowups, but the system doesn’t seem particularly shaken.

The bigger issue: as demand continues to soar, the problem isn’t only that credit spreads are already at eye-watering levels…it’s also that protection for lenders starts to loosen. Earlier in the cycle, “bad” deals with sloppy diligence and loose covenants simply didn’t get done. Now, with more capital chasing a smaller opportunity set, more bad deals are getting done, and things will likely end in tears for those investors who haven’t already faced the consequences (i.e., First Brands, Tricolor, etc).

Is this risk systemic in nature? That is also a question of opportunity vs. size.

Many think that private credit is fueling hyper inflated valuation levels for an AI bubble, leading to a bubble on the verge of popping. Perhaps we have an economy teetering on the edge of a recession, propped up by tech companies that have now become “too big to fail”.

But are private credit funds themselves too big to fail?

We agree with Michael Gatto in the clip from our show above, that when it comes to the private credit funds themselves, bigger generally seems better. Behemoth managers are seen as more attractive to new money entering the market: scale, diversification of investing skills, long memories, and hard fought experience all work in large firms’ favors.

Why?

First, having a team of experienced investors who have been through multiple market cycles means those managers know the traps that trip up newer entrants (i.e., those who have only ever experienced essentially a bull market). Pattern recognition is key.

Second, bigger players can throw their weight around. They can exert influence to ensure that loan docs are as friendly to their interests as possible.

And third, when it comes to debt, deeply understanding the legal elements of these loans (and having the most aggressive, experienced lawyers on your side) is essential. When you hear stories of “creditor-on-creditor violence” in Liability Management Exercises (LMEs), those with access to the best legal expertise often win out over those who never saw it coming…or couldn’t outspend their adversaries.

Investment management is a business that always favors scale, and private credit is no different. Look to the banking sector for your guide: there’s likely going to be a continued wave of smaller bank M&A, and the smaller regionals really only have a path to survival by teaming up. Similarly, the biggest firms in private capital tend to see the best deals.

Those who play in both the private credit and private equity space can be more nimble when it comes to winning deals. And if something goes wrong, they often have best in class in-house operators to course correct, stepping in quickly to take control and make strategic changes.

There are some downsides to scale, to be sure.

When there’s minimal diversification of control, bad strategy can become fatal. Hedge funds like Millennium now entering the space may benefit from macro and relative value expertise that traditional private capital firms lack. And smaller, boutique firms can outperform in niche or sub-scale transactions that the mega funds just won’t touch.

Unfortunately, those opportunities are hard to scale, and the operational burden of managing distressed outcomes will still favor firms with the most sophisticated and experienced teams that can go toe-to-toe in a legal fight. For many smaller managers, consolidation or strategic partnerships may be the most viable long term path.

The bigger issue with private credit is the lack of transparency, which makes outcomes seem more binary. Davide Scigliuzzo and Ellen Schneider wrote an article in Bloomberg last week about how Apollo’s private credit fund valued one loan at 77 cents on the dollar, while another fund co-managed by KKR and Future Standard valued it at 91 cents on the dollar. In the public bond markets, that kind of bid/offer hasn’t existed since the invention of the computer.

Ultimately, being a great private credit investor boils down to little more than simply not picking the losers, which means expert diligence and a skeptical eye at all times. Good deals will continue to get rewarded, bad deals will get exposed as the cycle continues, and while market conditions will continue to favor scale, scale in and of itself will not be a substitute for discipline.